Hooker Furnishings Corporation

Good day and welcome to the Hooker Furnishings Corporation fourth quarter 2025 earnings webcast call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Mr. Earl Armstrong, Senior Vice President and Chief Financial Officer. Please go ahead.

Thank you, Sherry, and good morning, everyone. Welcome to our quarterly conference call to review financial results for the fiscal 2025 fourth quarter and full year, both of which ended February 2, 2025. Joining me this morning is Jeremy Hoff, our Chief Executive Officer. We appreciate your participation today. During our call, we may make forward-looking statements which are subject to risks and uncertainties. A discussion of factors that could cause our actual results to differ materially from management's expectations is contained in our press release and SEC filing announcing our fiscal 25 results. Any forward-looking statement speaks only as of today, and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after today's call. Consolidated net sales for the fourth quarter increased by $7.7 million, an approximate 8% gain over the previous year's fourth quarter. The current quarter included 14 weeks compared to 13 weeks of the prior year's fourth quarter. On a consolidated basis, the additional week in the current period drove the increase, contributing approximately $7.7 million to consolidated net sales. However, Hooker Branded and Home Meridian sales increased by 2% and 13% respectively, based on average net sales per shipping day. These gains were partially offset by a $2 million or 7% decrease in sales at domestic upholstery. Significant charges in the fourth quarter included $1.3 million in end of life inventory write downs related to the planned exit of our Savannah facility, $878,000 in non-cash trade name impairment charges, $718,000 in bad debt expense related to a large customer bankruptcy, That's in addition to 2.4 million recorded in the third quarter and about 200,000 related to our previously announced cost reduction plan. These 3.1 million in charges drove a consolidated operating loss of 2.7 million and a net loss of 2.3 million or about 22 cents per diluted share for the fourth quarter. For fiscal 25, consolidated net sales were 397.5 million, a decrease of 35.8 million, or 8.3% compared to the previous fiscal year. All three reportable segments experienced sales decreases driven by continued weak demand, a depressed housing market, and broader macroeconomic uncertainties impacting nearly the entire home furnishings industry. Consolidated operating loss was 18.1 million for the year, primarily due to due to lower sales volumes and $10.8 million in charges, including $4.9 in restructuring costs related to our cost reduction plan, $3.1 million in bad debt expense from a major customer's bankruptcy, and $2.8 million in non-cash trade name impairment charges. Consolidated net loss amounted to $12.5 million or $1.19 per share. We expect fiscal 26 cost savings of about $1 million from the Savannah warehouse exit announced last month, net of associated transition costs. We expect annualized cost savings of 4 to 5.7 million beginning in fiscal 27. The exact amount of savings is dependent upon the ultimate timing of the exit. At the same time, we are finalizing the estimates of the potential financial impact of the Savannah warehouse exit. Currently, we expect to record net charges of between 3 million to 4 million in fiscal 26. In addition to the 10 million in annualized cost savings in fiscal 25 and expected to be realized in fiscal 26, we expect additional annualized cost savings of between eight to 10 million, which we anticipate will be realized over the next fiscal year with full benefits being felt in fiscal 27. The completion of our cost reduction plans is expected by the second half of fiscal 26. The total of these two initiatives are expected to save the company between 18 and $20 million. Now I'll turn the call over to Jeremy to comment on our fiscal 25 fourth quarter and full year results.

Thank you, Earl, and good morning, everyone. Hooker Furnishings demonstrated resilience this year with important accomplishments despite extremely difficult conditions in the home furnishing space that persist with few signs of improvement in the near and possibly medium term. We are focused on gaining market share and creating a pathway for profitability regardless of how long the furniture retail downturn persists. Despite the operating loss, our milestones in fiscal 25 included the Margaritaville licensing agreement, the launch of Hooker Branded's new merchandising strategy, Sunset West East Coast expansion, key inventory investments, and share gains amid a tough market. We were encouraged to report improved sales in the fourth quarter. Even considering the extra week, Hooker Branded and Home Meridian sales increased. According to an independent industry analysis, we had year-over-year market share growth of three to 15 basis points in each of the first three quarters of fiscal 25 in Hooker's legacy divisions, with fourth quarter data still pending. These gains build on a consistent trend of sequential market share gains in every quarter of fiscal 24. This consistent share growth, despite a contracting high-end segment, reinforces the competitive advantages we've built in our readiness to capitalize when demand rebounds. While macroeconomic headwinds, including the weakest housing market in 50 years, lower consumer confidence, and tariff uncertainty persist, we remain focused on what we can control. Excluding the charges Earl just mentioned, our financial performance improves sequentially each quarter of the year. Due to the continued economic environment, we've accelerated cost reduction initiatives, which we believe will improve operating income and cash flow. These include our planned exit of the Savannah warehouse, which is expected to save 4 to 5.7 million annually beginning in fiscal 27 and the opening of a new leased facility in Vietnam this May. When fully operational, the Vietnam warehouse will reduce domestic safety stock needs, improve product flow, enable container mixing, support margin expansion, and enable a speedier return on investment. Combined with other efforts, we expect to begin to realize a portion of the 18 to 20 million in total annual operating expense savings in fiscal 26 with full annualized expected cost savings beginning in fiscal 27. Now I want to turn the discussion back over to Earl, who will discuss highlights in each of our segments.